Net income per diluted share on a GAAP basis was $3.01 in the fourth
quarter of 2018 and $10.61 for the year ended December 31, 2018

Fourth quarter 2018 results include a net charge of $0.81 per diluted
share, and 2018 results include a net charge of $0.22 per diluted
share, for non-run-rate items

The overall medical care ratio in the fourth quarter improved to 84.6%
from 86.4%, sequentially, when excluding non-run rate items

After-tax margin was 4.3% in the fourth quarter and 3.7% for the
full-year 2018

The Company issued 2019 guidance of $9.25 - $9.75 net income per
diluted share on a GAAP basis, which does not include any prior-period
reserve development

February 11, 2019 04:15 PM Eastern Standard Time

LONG BEACH, Calif.--(BUSINESS WIRE)--Molina Healthcare, Inc. (NYSE: MOH) today reported its financial results
for the fourth quarter and year ended December 31, 2018, and provided
its guidance for fiscal year 2019.

“We have accomplished much over the last year as we executed the first
phase of our margin recovery and sustainability plan,” said Joe
Zubretsky, president and CEO. “Our full year results are a capstone to a
very successful beginning of this margin turnaround and growth story.

“Our guidance for 2019 reflects continued strength as we sustain our
margins while beginning to execute the growth phase of our strategy.”

Consolidated Results

Fourth Quarter of 2018 Compared With Third Quarter of 2018

Net income increased to $201 million, from $197 million in the third
quarter of 2018. Net income per diluted share increased to $3.01, from
$2.90 in the third quarter of 2018.

Premium revenue increased $101 million, or 2%, in the fourth quarter of
2018 compared with the third quarter of 2018. The sequential increase
was mainly in Medicaid and was attributed to a lower non-run rate
reduction in revenues for retroactive California Medicaid Expansion risk
corridor adjustments and favorable rate changes in other programs that
include retroactivity back to earlier periods in 2018.

Overall, the medical care ratio (“MCR”) decreased to 85.1%, from 87.4%
in the third quarter of 2018. Excluding the $24 million retroactive
California Medicaid Expansion risk corridor adjustment, related mainly
to the 2017-18 state fiscal period, the MCR would have been 84.6% in the
fourth quarter of 2018. Excluding the $57 million retroactive California
Medicaid Expansion risk corridor adjustment related to the 2016-17 state
fiscal period and a small benefit from the 2017 Marketplace cost sharing
reduction (“CSR”), the MCR would have been 86.4% in the third quarter of
2018. The sequential improvement in the overall underlying MCR was due
to decreases in the Medicaid, Medicare and Marketplace MCRs as follows:

The Medicaid MCR decreased slightly to 88.8%, from 90.5% in the third
quarter of 2018. Excluding the $24 million retroactive California
Medicaid Expansion risk corridor adjustment related mainly to the
2017-18 state fiscal period, the Medicaid MCR would have been 88.2% in
the fourth quarter of 2018. Excluding the $57 million retroactive
California Medicaid Expansion risk corridor adjustment related to the
2016-17 state fiscal period, the MCR would have been 89.0% in the
third quarter of 2018. The sequential decrease was mainly due to
improved performance in the Aged, Blind or Disabled (“ABD”) and
Temporary Assistance for Needy Families (“TANF”) programs.

The Medicare MCR decreased to 80.8%, from 87.3% in the third quarter
of 2018, mainly due to improved performance in our Medicare-Medicaid
Integrated plans (“MMPs”).

The Marketplace MCR decreased to 62.9%, from 64.1% in the third
quarter of 2018. Excluding the benefit of the 2017 CSR, the
Marketplace MCR would have been 65.3% in the third quarter of 2018.
The sequential decrease is mainly attributable to an increase in
premium revenue.

The general and administrative (“G&A”) expense ratio increased to 7.2%,
from 6.6% in the third quarter of 2018, due to seasonally higher
spending, including sales and marketing initiatives related to the open
enrollment period for the Marketplace and Medicare programs.

Fourth Quarter of 2018 Compared With Fourth Quarter of 2017

Net income for the fourth quarter of 2018 was $201 million, compared
with a net loss of $262 million for the fourth quarter of 2017. Net
income per diluted share was $3.01 for the fourth quarter of 2018
compared with a net loss per diluted share of $4.59 reported for the
fourth quarter of 2017. In the fourth quarter of 2017, we recorded
impairment losses and restructuring costs of $342 million, or $4.03 net
loss per diluted share.

Capital Plan Progress

In the fourth quarter of 2018, we repaid $62 million aggregate principal
amount of our 1.125% Notes and entered into privately negotiated
termination agreements to terminate the respective portion of the
related 1.125% Call Option and 1.125% Warrants. Year to date, we have
reduced the principal amount of outstanding debt by $759 million.

Sale of Pathways Behavioral Health Subsidiary

We closed on the sale of the Pathways behavioral health subsidiary in
October 2018. As a result of this transaction, we recorded a net loss of
$32 million, or $0.48 per diluted share.

2019 Guidance

The following table summarizes 2019 Guidance (1):

Premium revenue

~$15.8B

Premium tax revenue

~$375M

Investment income and other revenue

~$195M

Total revenue

~$16.3B

Medical care costs

~$13.7B

Medical care ratio (2)

86.7% - 87.0%

General and administrative expenses

~$1.2B

G&A ratio (3)

7.5% - 7.7%

Premium tax expenses

~$375M

Depreciation and amortization

~$85M

Interest expense and other expenses, net

~$100M

Income before income taxes

$790M - $840M

Net income

$600M - $630M

EBITDA (4)

$975M - $1,025M

Effective tax rate

24.5% - 25.0%

After-tax margin (3)

3.7% - 3.9%

Diluted weighted average shares

~64.7M

Net income per share

$9.25 - $9.75

End-of-year by membership by government program:

Medicaid and Medicare

3.2M

Marketplace

250K - 275K

__________________

(1)

All amounts are estimates and do not include non-recurring
significant items. Earnings per diluted share as shown is
calculated on a GAAP basis; actual results may differ materially.
See the Company’s risk factors as discussed in its 2018 Form 10-K
and other filings and the statements below in this press release
after the heading “Safe Harbor Statement under the Private
Securities Litigation Reform Act of 1995.”

G&A ratio represents general and administrative expenses as a
percentage of total revenue. After-tax margin represents net
income as a percentage of total revenue.

(4)

See reconciliation of non-GAAP financial measures at the end of
this release.

Conference Call

Management will host a conference call and webcast to discuss Molina
Healthcare’s fourth quarter and year-end 2018 results at 8:30 a.m.
Eastern time on Tuesday, February 12, 2019. The number to call for the
interactive teleconference is (877) 883-0383 and the confirmation number
is 2698825. A telephonic replay of the conference call will be available
through Tuesday, February 19, 2019, by dialing (877) 344-7529 and
entering confirmation number 10127491. A live audio broadcast of this
conference call will be available on Molina Healthcare’s website, molinahealthcare.com.
A 30-day online replay will be available approximately an hour following
the conclusion of the live broadcast.

About Molina Healthcare

Molina Healthcare, Inc., a FORTUNE 500 company, provides managed health
care services under the Medicaid and Medicare programs and through the
state insurance marketplaces. Through its locally operated health plans,
Molina Healthcare served approximately 3.8 million members as of
December 31, 2018. For more information about Molina Healthcare, please
visit molinahealthcare.com.

This earnings release contains “forward-looking statements” regarding
the Company’s 2018 revised guidance, as well as its plans, expectations,
and anticipated future events. Actual results could differ materially
due to numerous known and unknown risks and uncertainties. Those known
risks and uncertainties include, but are not limited to, the following:

the numerous political, judicial and market-based uncertainties
associated with the Affordable Care Act (the “ACA”) or “Obamacare,”
including the ultimate outcome on appeal of the Texas et al. v. U.S.
et al. matter;

the market dynamics surrounding the ACA Marketplaces, including but
not limited to uncertainties associated with risk adjustment
requirements, the potential for disproportionate enrollment of higher
acuity members, the discontinuation of premium tax credits, and the
adequacy of agreed rates;

subsequent adjustments to reported premium revenue based upon
subsequent developments or new information, including changes to
estimated amounts payable or receivable related to Marketplace risk
adjustment;

effective management of the Company’s medical costs;

the Company’s ability to predict with a reasonable degree of
accuracy utilization rates, including utilization rates associated
with seasonal flu patterns or other newly emergent diseases;

significant budget pressures on state governments and their
potential inability to maintain current rates, to implement expected
rate increases, or to maintain existing benefit packages or membership
eligibility thresholds or criteria;

the full reimbursement of the ACA health insurer fee, or HIF;

the success of the Company’s efforts to retain existing or awarded
government contracts, including the success of any requests for
proposal protest filings or defenses;

the success of the Company’s profit improvement and maintenance
initiatives, including the timing and amounts of the benefits
realized, and administrative and medical cost savings achieved;

the Company’s ability to manage its operations, including
maintaining and creating adequate internal systems and controls
relating to authorizations, approvals, provider payments, and the
overall success of its care management initiatives;

the Company’s receipt of adequate premium rates to support
increasing pharmacy costs, including costs associated with specialty
drugs and costs resulting from formulary changes that allow the option
of higher-priced non-generic drugs;

the Company’s ability to operate profitably in an environment where
the trend in premium rate increases lags behind the trend in
increasing medical costs;

the Medicaid expansion medical cost corridor, and any other
retroactive adjustment to revenue where methodologies and procedures
are subject to interpretation or dependent upon information about the
health status of participants other than Molina members;

the interpretation and implementation of at-risk premium rules and
state contract performance requirements regarding the achievement of
certain quality measures, and the Company’s ability to recognize
revenue amounts associated therewith;

the Company’s ability to successfully recognize the intended cost
savings and other intended benefits of outsourcing certain services
and functions to third parties, and its ability to manage the risk
that such third parties may not perform contracted functions and
services in a timely, satisfactory and compliant manner;

cyber-attacks or other privacy or data security incidents resulting
in an inadvertent unauthorized disclosure of protected health
information;

the success of the Company’s health plan in Puerto Rico, including
the resolution of the debt crisis and the effect of the PROMESA law,
and the impact of any future significant weather events;

the success and renewal of the Company’s duals demonstration
programs in California, Illinois, Michigan, Ohio, South Carolina, and
Texas;

the accurate estimation of incurred but not reported or paid
medical costs across the Company’s health plans;

efforts by states to recoup previously paid and recognized premium
amounts;

complications, member confusion, eligibility redeterminations, or
enrollment backlogs related to the annual renewal of Medicaid coverage;

government audits, reviews, comment letters, or potential
investigations, and any fine, sanction, enrollment freeze, monitoring
program, or premium recovery that may result therefrom;

changes with respect to the Company’s provider contracts and the
loss of providers;

approval by state regulators of dividends and distributions by the
Company’s health plan subsidiaries;

changes in funding under the Company’s contracts as a result of
regulatory changes, programmatic adjustments, or other reforms;

high dollar claims related to catastrophic illness;

the favorable resolution of litigation, arbitration, or
administrative proceedings, including litigation involving the ACA to
which we ourselves are not a direct party;

the relatively small number of states in which we operate health
plans, including the greater scale and revenues of the Company’s
California, Ohio, Texas, and Washington health plans;

the availability of adequate financing on acceptable terms to fund
and capitalize the Company’s expansion and growth, repay the Company’s
outstanding indebtedness at maturity and meet its liquidity needs,
including the interest expense and other costs associated with such
financing;

the Company’s failure to comply with the financial or other
covenants in its credit agreement or the indentures governing its
outstanding notes;

the sufficiency of the Company’s funds on hand to pay the amounts
due upon conversion or maturity of its outstanding notes;

the failure of a state in which we operate to renew its federal
Medicaid waiver;

the loss of services of a key executive;

changes generally affecting the managed care industry;

increases in government surcharges, taxes, and assessments;

newly emergent viruses or widespread epidemics, public catastrophes
or terrorist attacks, and associated public alarm;

the unexpected loss of the leadership of one or more of our senior
executives;

increasing competition and consolidation in the Medicaid industry;

and numerous other risk factors, including those discussed in the
Company’s periodic reports and filings with the Securities and Exchange
Commission. These reports can be accessed under the investor relations
tab of the Company’s website or on the SEC’s website at sec.gov.
Given these risks and uncertainties, the Company can give no assurances
that its forward-looking statements will prove to be accurate, or that
any other results or events projected or contemplated by its
forward-looking statements will in fact occur, and the Company cautions
investors not to place undue reliance on these statements. All
forward-looking statements in this release represent the Company’s
judgment as of February 11, 2019, and the Company disclaims any
obligation to update any forward-looking statements to conform the
statement to actual results or changes in its expectations.

MOLINA HEALTHCARE, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

December 31,

Year Ended

December 31,

2018

2017

2018

2017

(In millions, except per-share amounts)

Revenue:

Premium revenue

$

4,438

$

4,689

$

17,612

$

18,854

Service revenue

16

131

407

521

Premium tax revenue

97

107

417

438

Health insurer fees reimbursed

81

—

329

—

Investment income and other revenue

32

22

125

70

Total revenue

4,664

4,949

18,890

19,883

Operating expenses:

Medical care costs

3,775

4,251

15,137

17,073

Cost of service revenue

15

123

364

492

General and administrative expenses

335

367

1,333

1,594

Premium tax expenses

97

107

417

438

Health insurer fees

87

—

348

—

Depreciation and amortization

23

28

99

137

Restructuring and separation costs

8

73

46

234

Impairment losses

—

269

—

470

Total operating expenses

4,340

5,218

17,744

20,438

Loss on sales of subsidiaries, net of gain

(52

)

—

(15

)

—

Operating income (loss)

272

(269

)

1,131

(555

)

Other expenses, net:

Interest expense

24

33

115

118

Other (income) expenses, net

(8

)

14

17

(61

)

Total other expenses, net

16

47

132

57

Income (loss) before income tax expense (benefit)

256

(316

)

999

(612

)

Income tax expense (benefit)

55

(54

)

292

(100

)

Net income (loss)

$

201

$

(262

)

$

707

$

(512

)

Net income (loss) per diluted share

$

3.01

$

(4.59

)

$

10.61

$

(9.07

)

Diluted weighted average shares outstanding

66.6

57.1

66.6

56.4

Operating Statistics:

Medical care ratio

85.1

%

90.7

%

85.9

%

90.6

%

G&A ratio

7.2

%

7.4

%

7.1

%

8.0

%

Premium tax ratio

2.2

%

2.2

%

2.3

%

2.3

%

Effective income tax expense (benefit) rate

21.4

%

(17.2

)%

29.2

%

(16.4

)%

After-tax margin

4.3

%

(5.3

)%

3.7

%

(2.6

)%

MOLINA HEALTHCARE, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

December 31,

2018

2017

(In millions,except share data)

ASSETS

Current assets:

Cash and cash equivalents

$

2,826

$

3,186

Investments

1,681

2,524

Restricted investments

—

169

Receivables

1,330

871

Prepaid expenses and other current assets

149

239

Derivative asset

476

522

Total current assets

6,462

7,511

Property, equipment, and capitalized software, net

241

342

Goodwill and intangible assets, net

190

255

Restricted investments

120

119

Deferred income taxes

117

103

Other assets

24

141

$

7,154

$

8,471

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Medical claims and benefits payable

$

1,961

$

2,192

Amounts due government agencies

967

1,542

Accounts payable and accrued liabilities

390

366

Deferred revenue

211

282

Current portion of long-term debt

241

653

Derivative liability

476

522

Total current liabilities

4,246

5,557

Long-term debt

1,020

1,318

Lease financing obligations

197

198

Other long-term liabilities

44

61

Total liabilities

5,507

7,134

Stockholders’ equity:

Common stock, $0.001 par value, 150 million shares authorized;
outstanding: 62 million shares at December 31, 2018 and 60 million
shares at December 31, 2017

“Other” includes the Idaho, Mississippi, New York, Utah and
Wisconsin health plans, which are not individually significant to
our consolidated operating results.

MOLINA HEALTHCARE, INC.

UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—

BY GOVERNMENT PROGRAM

(In millions, except percentages and per-member per-month
amounts)

Three Months Ended December 31, 2018

Member

Months (1)

Premium Revenue

Medical Care Costs

MCR (2)

Medical

Margin

Total

PMPM

Total

PMPM

TANF and CHIP

7.1

$

1,363

$

189.86

$

1,203

$

167.61

88.3

%

$

160

Medicaid Expansion

2.0

700

349.05

630

314.34

90.1

70

ABD

1.3

1,367

1,094.14

1,213

970.49

88.7

154

Total Medicaid

10.4

3,430

328.79

3,046

292.00

88.8

384

MMP

0.2

366

2,263.41

300

1,855.34

82.0

66

Medicare

0.1

161

1,206.96

126

944.65

78.3

35

Total Medicare

0.3

527

1,784.58

426

1,442.57

80.8

101

Total Medicaid and Medicare

10.7

3,957

368.93

3,472

323.72

87.7

485

Marketplace

1.1

481

437.79

303

275.56

62.9

178

11.8

$

4,438

$

375.33

$

3,775

$

319.24

85.1

%

$

663

Three Months Ended December 31, 2017

Member

Months

Premium Revenue

Medical Care Costs

MCR

Medical

Margin

Total

PMPM

Total

PMPM

TANF and CHIP

7.4

$

1,369

$

183.95

$

1,250

$

168.00

91.3

%

$

119

Medicaid Expansion

2.0

774

386.22

629

313.89

81.3

145

ABD

1.3

1,366

1,100.22

1,229

989.56

89.9

137

Total Medicaid

10.7

3,509

328.28

3,108

290.76

88.6

401

MMP

0.2

363

2,142.07

341

2,006.07

93.7

22

Medicare

0.1

152

1,155.15

124

948.16

82.1

28

Total Medicare

0.3

515

1,710.94

465

1,543.93

90.2

50

Total Medicaid and Medicare

11.0

4,024

366.18

3,573

325.12

88.8

451

Marketplace

2.4

665

268.39

678

273.92

102.1

(13

)

13.4

$

4,689

$

348.20

$

4,251

$

315.70

90.7

%

$

438

__________________

(1)

A member month is defined as the aggregate of each month’s ending
membership for the period presented.

(2)

The MCR represents medical costs as a percentage of premium
revenue.

MOLINA HEALTHCARE, INC.

UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—

BY GOVERNMENT PROGRAM

(In millions, except percentages and per-member per-month
amounts)

Year Ended December 31, 2018

Member

Months

Premium Revenue

Medical Care Costs

MCR

Medical

Margin

Total

PMPM

Total

PMPM

TANF and CHIP

29.4

$

5,508

$

187.04

$

4,908

$

166.66

89.1

%

$

600

Medicaid Expansion

8.1

2,884

356.81

2,587

320.11

89.7

297

ABD

5.0

5,231

1,049.26

4,763

955.22

91.0

468

Total Medicaid

42.5

13,623

320.43

12,258

288.31

90.0

1,365

MMP

0.7

1,443

2,192.58

1,241

1,885.59

86.0

202

Medicare

0.5

631

1,180.46

511

955.81

81.0

120

Total Medicare

1.2

2,074

1,738.85

1,752

1,468.77

84.5

322

Total Medicaid and Medicare

43.7

15,697

359.14

14,010

320.53

89.2

1,687

Marketplace

4.9

1,915

392.97

1,127

231.33

58.9

788

48.6

$

17,612

$

362.54

$

15,137

$

311.59

85.9

%

$

2,475

Year Ended December 31, 2017

Member

Months

Premium Revenue

Medical Care Costs

MCR

Medical

Margin

Total

PMPM

Total

PMPM

TANF and CHIP

30.2

$

5,554

$

183.75

$

5,111

$

169.09

92.0

%

$

443

Medicaid Expansion

8.1

3,150

388.42

2,674

329.73

84.9

476

ABD

4.9

5,135

1,050.41

4,863

994.80

94.7

272

Total Medicaid

43.2

13,839

320.16

12,648

292.61

91.4

1,191

MMP

0.7

1,446

2,177.72

1,317

1,982.36

91.0

129

Medicare

0.5

601

1,143.63

493

939.67

82.2

108

Total Medicare

1.2

2,047

1,722.47

1,810

1,523.15

88.4

237

Total Medicaid and Medicare

44.4

15,886

357.68

14,458

325.53

91.0

1,428

Marketplace

10.8

2,968

274.47

2,615

241.84

88.1

353

55.2

$

18,854

$

341.39

$

17,073

$

309.14

90.6

%

$

1,781

MOLINA HEALTHCARE, INC.

UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—

MEDICAID AND MEDICARE BY HEALTH PLAN

(In millions, except percentages and per-member per-month
amounts)

Three Months Ended December 31, 2018

Member

Months

Premium Revenue

Medical Care Costs

MCR

Medical

Margin

Total

PMPM

Total

PMPM

California

1.8

$

485

$

282.83

$

425

$

247.56

87.5

%

$

60

Florida

1.0

370

376.80

345

351.20

93.2

25

Illinois

0.7

242

361.29

196

291.63

80.7

46

Michigan

1.1

389

348.47

320

287.33

82.5

69

New Mexico

0.6

305

489.86

265

425.85

86.9

40

Ohio

0.9

607

662.51

527

575.69

86.9

80

Puerto Rico

0.8

147

173.81

135

158.97

91.5

12

South Carolina

0.3

126

352.67

106

299.17

84.8

20

Texas

0.6

581

865.75

538

801.34

92.6

43

Washington

2.3

512

225.52

455

200.72

89.0

57

Other (1)

0.6

193

344.31

160

283.96

82.5

33

10.7

$

3,957

$

368.93

$

3,472

$

323.72

87.7

%

$

485

Three Months Ended December 31, 2017

Member

Months

Premium Revenue

Medical Care Costs

MCR

Medical

Margin

Total

PMPM

Total

PMPM

California

1.8

$

621

$

335.46

$

531

$

286.70

85.5

%

$

90

Florida

1.1

390

358.34

349

320.47

89.4

41

Illinois

0.5

146

294.68

146

295.25

100.2

—

Michigan

1.1

383

339.23

325

287.60

84.8

58

New Mexico

0.7

325

465.52

279

400.84

86.1

46

Ohio

1.0

532

555.50

460

480.48

86.5

72

Puerto Rico

0.9

179

187.49

178

187.68

100.1

1

South Carolina

0.4

116

337.14

111

320.47

95.1

5

Texas

0.7

558

796.86

510

728.72

91.4

48

Washington

2.2

610

275.76

540

243.70

88.4

70

Other

0.6

164

292.88

144

256.26

87.5

20

11.0

$

4,024

$

366.18

$

3,573

$

325.12

88.8

%

$

451

__________________

(1)

“Other” includes the Idaho, Mississippi, New York, Utah and
Wisconsin health plans, which are not individually significant to
our consolidated operating results.

MOLINA HEALTHCARE, INC.

UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—

MEDICAID AND MEDICARE BY HEALTH PLAN

(In millions, except percentages and per-member per-month
amounts)

Year Ended December 31, 2018

Member

Months

Premium Revenue

Medical Care Costs

MCR

Medical

Margin

Total

PMPM

Total

PMPM

California

7.1

$

1,931

$

273.59

$

1,724

$

244.21

89.3

%

$

207

Florida

4.2

1,517

360.98

1,414

336.43

93.2

103

Illinois

2.5

793

322.87

670

272.61

84.4

123

Michigan

4.5

1,550

344.42

1,303

289.53

84.1

247

New Mexico

2.6

1,241

474.10

1,140

435.65

91.9

101

Ohio

3.7

2,277

608.29

2,001

534.59

87.9

276

Puerto Rico

3.7

696

186.59

636

170.45

91.4

60

South Carolina

1.4

495

351.38

429

304.85

86.8

66

Texas

2.7

2,296

839.70

2,092

765.12

91.1

204

Washington

9.1

2,178

240.42

1,999

220.72

91.8

179

Other

2.2

723

329.06

602

273.55

83.1

121

43.7

$

15,697

$

359.14

$

14,010

$

320.53

89.2

%

$

1,687

Year Ended December 31, 2017

Member

Months

Premium Revenue

Medical Care Costs

MCR

Medical

Margin

Total

PMPM

Total

PMPM

California

7.4

$

2,392

$

321.46

$

2,117

$

284.53

88.5

%

$

275

Florida

4.3

1,522

350.15

1,461

335.97

96.0

61

Illinois

2.1

593

286.69

638

308.41

107.6

(45

)

Michigan

4.6

1,545

334.22

1,360

294.15

88.0

185

New Mexico

2.9

1,258

439.95

1,166

407.94

92.7

92

Ohio

3.9

2,130

544.98

1,894

484.66

88.9

236

Puerto Rico

3.8

732

190.13

691

179.65

94.5

41

South Carolina

1.4

445

328.41

412

304.04

92.6

33

Texas

2.8

2,150

769.82

1,978

708.20

92.0

172

Washington

8.9

2,445

275.64

2,143

241.55

87.6

302

Other

2.3

674

292.92

598

259.85

88.7

76

44.4

$

15,886

$

357.68

$

14,458

$

325.53

91.0

%

$

1,428

MOLINA HEALTHCARE, INC.

UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—

MARKETPLACE BY HEALTH PLAN

(In millions, except percentages and per-member per-month
amounts)

Three Months Ended December 31, 2018

Member

Months

Premium Revenue

Medical Care Costs

MCR

Medical

Margin

Total

PMPM

Total

PMPM

California

—

$

48

$

322.39

$

36

$

248.84

77.2

%

$

12

Florida

0.1

62

526.44

32

278.60

52.9

30

Michigan

0.1

11

259.20

8

166.54

64.3

3

New Mexico

0.1

22

328.32

19

302.79

92.2

3

Ohio

0.1

27

512.33

20

366.62

71.6

7

Texas

0.7

269

440.81

153

250.66

56.9

116

Washington

—

44

697.31

35

536.80

77.0

9

Other (1)

—

(2

)

NM

—

NM

NM

(2

)

1.1

$

481

$

437.79

$

303

$

275.56

62.9

%

$

178

Three Months Ended December 31, 2017

Member

Months

Premium Revenue

Medical Care Costs

MCR

Medical

Margin

Total

PMPM

Total

PMPM

California

0.5

$

68

$

163.41

$

75

$

181.70

111.2

%

$

(7

)

Florida

0.8

225

283.63

251

316.67

111.6

(26

)

Michigan

0.1

10

153.52

11

166.49

108.5

(1

)

New Mexico

0.1

28

387.65

22

291.42

75.2

6

Ohio

—

18

355.81

17

317.65

89.3

1

Texas

0.5

146

242.38

166

276.16

113.9

(20

)

Washington

0.1

40

321.91

28

233.26

72.5

12

Other

0.3

130

364.63

108

305.05

83.7

22

2.4

$

665

$

268.39

$

678

$

273.92

102.1

%

$

(13

)

__________________

(1)

“Other” includes the Utah and Wisconsin health plans, where we did
not participate in the Marketplace in 2018. Therefore, the ratios
for 2018 periods are not meaningful (NM).

MOLINA HEALTHCARE, INC.

UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—

MARKETPLACE BY HEALTH PLAN

(In millions, except percentages and per-member per-month
amounts)

Year Ended December 31, 2018

Member

Months

Premium Revenue

Medical Care Costs

MCR

Medical

Margin

Total

PMPM

Total

PMPM

California

0.6

$

219

$

325.84

$

125

$

187.37

57.5

%

$

94

Florida

0.6

273

498.66

99

181.52

36.4

174

Michigan

0.2

51

250.69

31

150.11

59.9

20

New Mexico

0.3

115

403.55

74

260.29

64.5

41

Ohio

0.3

111

477.03

78

334.32

70.1

33

Texas

2.7

948

356.06

593

222.89

62.6

355

Washington

0.2

183

664.48

140

506.07

76.2

43

Other

—

15

NM

(13

)

NM

NM

28

4.9

$

1,915

$

392.97

$

1,127

$

231.33

58.9

%

$

788

Year Ended December 31, 2017

Member

Months

Premium Revenue

Medical Care Costs

MCR

Medical

Margin

Total

PMPM

Total

PMPM

California

1.7

$

309

$

185.88

$

231

$

138.61

74.6

%

$

78

Florida

3.6

1,046

293.35

1,009

283.17

96.5

37

Michigan

0.3

51

180.26

38

135.64

75.2

13

New Mexico

0.3

110

349.50

84

264.14

75.6

26

Ohio

0.2

86

363.24

81

340.44

93.7

5

Texas

2.6

663

250.08

517

195.20

78.1

146

Washington

0.5

163

317.39

156

304.74

96.0

7

Other

1.6

540

340.13

499

314.21

92.4

41

10.8

$

2,968

$

274.47

$

2,615

$

241.84

88.1

%

$

353

MOLINA HEALTHCARE, INC.

UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—

TOTAL BY HEALTH PLAN

(In millions, except percentages and per-member per-month
amounts)

Three Months Ended December 31, 2018

Member

Months

Premium Revenue

Medical Care Costs

MCR

Medical

Margin

Total

PMPM

Total

PMPM

California

1.8

$

533

$

285.98

$

461

$

247.66

86.6

%

$

72

Florida

1.1

432

392.68

377

343.49

87.5

55

Illinois

0.7

242

361.29

196

291.63

80.7

46

Michigan

1.2

400

344.96

328

282.58

81.9

72

New Mexico

0.7

327

474.44

284

414.10

87.3

43

Ohio

1.0

634

654.39

547

564.37

86.2

87

Puerto Rico

0.8

147

173.81

135

158.97

91.5

12

South Carolina

0.3

126

352.67

106

299.17

84.8

20

Texas

1.3

850

663.84

691

539.68

81.3

159

Washington

2.3

556

238.21

490

209.76

88.1

66

Other (1)

0.6

191

344.44

160

285.37

82.9

31

11.8

$

4,438

$

375.33

$

3,775

$

319.24

85.1

%

$

663

Three Months Ended December 31, 2017

Member

Months

Premium Revenue

Medical Care Costs

MCR

Medical

Margin

Total

PMPM

Total

PMPM

California

2.3

$

689

$

303.98

$

606

$

267.49

88.0

%

$

83

Florida

1.9

615

326.80

600

318.86

97.6

15

Illinois

0.5

146

294.68

146

295.25

100.2

—

Michigan

1.2

393

329.50

336

281.26

85.4

57

New Mexico

0.8

353

458.22

301

390.58

85.2

52

Ohio

1.0

550

545.09

477

471.99

86.6

73

Puerto Rico

0.9

179

187.49

178

187.68

100.1

1

South Carolina

0.4

116

337.14

111

320.47

95.1

5

Texas

1.2

704

541.55

676

520.34

96.1

28

Washington

2.3

650

278.21

568

243.15

87.4

82

Other

0.9

294

320.77

252

275.23

85.8

42

13.4

$

4,689

$

348.20

$

4,251

$

315.70

90.7

%

$

438

__________________

(1)

“Other” includes the Idaho, Mississippi, New York, Utah and
Wisconsin health plans, which are not individually significant to
our consolidated operating results.

MOLINA HEALTHCARE, INC.

UNAUDITED SELECTED HEALTH PLANS SEGMENT FINANCIAL DATA—

TOTAL BY HEALTH PLAN

(In millions, except percentages and per-member per-month
amounts)

Year Ended December 31, 2018

Member

Months

Premium Revenue

Medical Care Costs

MCR

Medical

Margin

Total

PMPM

Total

PMPM

California

7.7

$

2,150

$

278.13

$

1,849

$

239.28

86.0

%

$

301

Florida

4.8

1,790

376.84

1,513

318.58

84.5

277

Illinois

2.5

793

322.87

670

272.61

84.4

123

Michigan

4.7

1,601

340.35

1,334

283.47

83.3

267

New Mexico

2.9

1,356

467.17

1,214

418.44

89.6

142

Ohio

4.0

2,388

600.62

2,079

522.89

87.1

309

Puerto Rico

3.7

696

186.59

636

170.45

91.4

60

South Carolina

1.4

495

351.38

429

304.85

86.8

66

Texas

5.4

3,244

601.23

2,685

497.75

82.8

559

Washington

9.3

2,361

252.92

2,139

229.13

90.6

222

Other

2.2

738

336.86

589

268.17

79.6

149

48.6

$

17,612

$

362.54

$

15,137

$

311.59

85.9

%

$

2,475

Year Ended December 31, 2017

Member

Months

Premium Revenue

Medical Care Costs

MCR

Medical

Margin

Total

PMPM

Total

PMPM

California

9.1

$

2,701

$

296.68

$

2,348

$

257.86

86.9

%

$

353

Florida

7.9

2,568

324.56

2,470

312.18

96.2

98

Illinois

2.1

593

286.69

638

308.41

107.6

(45

)

Michigan

4.9

1,596

325.43

1,398

285.11

87.6

198

New Mexico

3.2

1,368

430.97

1,250

393.67

91.3

118

Ohio

4.1

2,216

534.56

1,975

476.39

89.1

241

Puerto Rico

3.8

732

190.13

691

179.65

94.5

41

South Carolina

1.4

445

328.41

412

304.04

92.6

33

Texas

5.4

2,813

516.84

2,495

458.50

88.7

318

Washington

9.4

2,608

277.93

2,299

245.01

88.2

309

Other

3.9

1,214

312.20

1,097

282.06

90.3

117

55.2

$

18,854

$

341.39

$

17,073

$

309.14

90.6

%

$

1,781

MOLINA HEALTHCARE, INC.

UNAUDITED SELECTED FINANCIAL DATA

(In millions, except percentages and per-member per-month
amounts)

The following tables provide the details of our medical care costs
for the periods indicated:

Three Months Ended December 31,

2018

2017

Amount

PMPM

% of

Total

Amount

PMPM

% of

Total

Fee for service

$

2,807

$

237.39

74.4

%

$

3,052

$

226.66

71.8

%

Pharmacy

493

41.68

13.1

659

48.88

15.4

Capitation

293

24.83

7.7

338

25.13

8.0

Other

182

15.34

4.8

202

15.03

4.8

$

3,775

$

319.24

100.0

%

$

4,251

$

315.70

100.0

%

Year Ended December 31,

2018

2017

Amount

PMPM

% of

Total

Amount

PMPM

% of

Total

Fee for service

$

11,278

$

232.15

74.5

%

$

12,682

$

229.63

74.3

%

Pharmacy

2,138

44.01

14.1

2,563

46.40

15.0

Capitation

1,184

24.38

7.8

1,360

24.63

8.0

Other

537

11.05

3.6

468

8.48

2.7

$

15,137

$

311.59

100.0

%

$

17,073

$

309.14

100.0

%

The following table provides the details of our medical claims and
benefits payable as of the dates indicated:

December 31,

2018

2017

Fee-for-service claims incurred but not paid (IBNP)

$

1,562

$

1,717

Pharmacy payable

115

112

Capitation payable

52

67

Other (1)

232

296

$

1,961

$

2,192

______________________

(1)

“Other” medical claims and benefits payable include amounts
payable to certain providers for which we act as an intermediary
on behalf of various state agencies without assuming financial
risk. Such receipts and payments do not impact our consolidated
statements of operations. As of December 31, 2018 and 2017, we had
recorded non-risk provider payables of approximately $107 million
and $122 million, respectively.

MOLINA HEALTHCARE, INC.

UNAUDITED CHANGE IN MEDICAL CLAIMS AND BENEFITS PAYABLE

(Dollars in millions)

Our claims liability includes a provision for adverse claims
deviation based on historical experience and other factors
including, but not limited to, variations in claims payment
patterns, changes in utilization and cost trends, known outbreaks
of disease, and large claims. Our reserving methodology is
consistently applied across all periods presented. The amounts
displayed for “Components of medical care costs related to: Prior
period” represent the amount by which our original estimate of
claims and benefits payable at the beginning of the period was
(more) less than the actual amount of the liability based on
information (principally the payment of claims) developed since
that liability was first reported. The following table presents
the components of the change in medical claims and benefits
payable for the periods indicated:

Year Ended December 31,

2018

2017

Medical claims and benefits payable, beginning balance

$

2,192

$

1,929

Components of medical care costs related to:

Current period

15,478

17,037

Prior period (1)

(341

)

36

Total medical care costs

15,137

17,073

Change in non-risk provider payables

13

(106

)

Payments for medical care costs related to:

Current period

13,671

15,130

Prior period

1,710

1,574

Total paid

15,381

16,704

Medical claims and benefits payable, ending balance

$

1,961

$

2,192

Days in claims payable, fee for service (2)

53

54

______________________

(1)

Includes the 2018 benefit of the 2017 Marketplace CSR
reimbursement of $81 million.

(2)

Claims payable includes primarily IBNP. It also includes certain
fee-for-service payables reported in “Other” medical claims and
benefits payable amounting to $43 million and $99 million, as of
December 31, 2018 and 2017, respectively.

MOLINA HEALTHCARE, INC.

UNAUDITED SUMMARY OF SIGNIFICANT ITEMS AFFECTING CURRENT QUARTER
AND

YEAR-TO-DATE FINANCIAL RESULTS

(In millions, except per diluted share amounts)

The table below summarizes the impact of certain items significant
to our financial performance in the periods presented. The
individual items presented below increase (decrease) income before
income tax expense.

Three Months Ended December 31, 2018

Year Ended December 31, 2018

Amount

Per Diluted Share (1)

Amount

Per Diluted Share (1)

Retroactive California Medicaid Expansion risk corridor

$

(24

)

$

(0.28

)

$

(81

)

$

(0.95

)

Marketplace risk adjustment, for 2017 dates of service

—

—

56

0.66

Marketplace CSR subsidies, for 2017 dates of service

—

—

81

0.95

Loss on sales of subsidiaries, net of gain

(52

)

(0.48

)

(15

)

(0.05

)

Restructuring costs

(8

)

(0.09

)

(46

)

(0.54

)

Gain (loss) on debt extinguishment

3

0.04

(22

)

(0.29

)

$

(81

)

$

(0.81

)

$

(27

)

$

(0.22

)

(1)

Except for permanent differences between GAAP and tax (such as
certain expenses that are not deductible for tax purposes), per
diluted share amounts are generally calculated at the statutory
income tax rate of 22%.

MOLINA HEALTHCARE, INC.

UNAUDITED NON-GAAP FINANCIAL MEASURES

(In millions, except per diluted share amounts)

We use non-generally accepted accounting principles, or non-GAAP,
financial measures as supplemental metrics in evaluating our
financial performance, making financing and business decisions,
and forecasting and planning for future periods. For these
reasons, management believes such measures are useful supplemental
measures to investors in comparing our performance to the
performance of other public companies in the health care industry.
These non-GAAP financial measures should be considered as
supplements to, and not as substitutes for or superior to, GAAP
measures. See further information regarding non-GAAP measures
below the tables.

Three Months Ended December 31,

Year Ended December 31,

2018

2017

2018

2017

Net income (loss)

$

201

$

(262

)

$

707

$

(512

)

Adjustments:

Depreciation, and amortization of intangible assets and capitalized
software

23

36

118

165

Interest expense

24

33

115

118

Income tax expense (benefit)

55

(54

)

292

(100

)

EBITDA

$

303

$

(247

)

$

1,232

$

(329

)

Three Months Ended December 31,

Year Ended December 31,

2018

2017

2018

2017

Amount

Per

Diluted

Share

Amount

Per

Diluted

Share

Amount

Per

Diluted

Share

Amount

Per

Diluted

Share

Net income (loss)

$

201

$

3.01

$

(262

)

$

(4.59

)

$

707

$

10.61

$

(512

)

$

(9.07

)

Adjustment:

Amortization of intangible assets

6

0.08

6

0.11

22

0.32

30

0.55

Income tax effect (1)

(1

)

(0.02

)

(2

)

(0.04

)

(5

)

(0.07

)

(11

)

(0.20

)

Amortization of intangible assets, net of tax effect

5

0.06

4

0.07

17

0.25

19

0.35

Adjusted net income (loss)

$

206

$

3.07

$

(258

)

$

(4.52

)

$

724

$

10.86

$

(493

)

$

(8.72

)

________________________

(1)

Income tax effect of adjustments calculated at the blended federal
and state statutory tax rate of 22% and 37% for 2018 and 2017,
respectively.

The following are descriptions of the adjustments made to GAAP measures
used to calculate the non-GAAP measures used in this news release:

Earnings before interest, taxes, depreciation and amortization (“EBITDA”):
Net income (loss) on a GAAP basis less depreciation, and amortization of
intangible assets and capitalized software, interest expense and income
tax expense. We believe that EBITDA is helpful in assessing our ability
to meet the cash demands of our operating units.

Adjusted net income: Net income (loss) on a GAAP basis less
amortization of intangible assets, net of income tax effect calculated
at the statutory tax rate. We believe that adjusted net income (loss) is
helpful in assessing our financial performance exclusive of the non-cash
impact of the amortization of purchased intangibles.

Adjusted net income per diluted share: Adjusted net income (loss)
divided by weighted average common shares outstanding on a fully diluted
basis.

MOLINA HEALTHCARE, INC.

2019 GUIDANCE

Reconciliation of Non-GAAP Financial
Measures

Low End

High End

(In millions)

Net income

$

600

$

630

Adjustments:

Depreciation, and amortization of intangible assets and capitalized
software